What is profit and loss?
Profit is what you make when sell price > cost price. Loss is what you lose when sell price < cost price. Both are typically expressed as percentages of the cost price (for traders / businesses) or as absolute rupees (for one-off transactions).
The math is trivial, but the interpretation depends on context: a 20% trading profit in a single day is exceptional; a 20% net business profit margin is healthy; a 20% retail markup is below market.
How is profit/loss calculated?
Profit / Loss = Sell Price − Cost Price
Profit % = (Profit / Cost Price) × 100
Loss % = (Loss / Cost Price) × 100
If you bought at ₹100 and sold at ₹120: profit = ₹20, profit % = 20%. If you bought at ₹100 and sold at ₹85: loss = ₹15, loss % = 15%.
Worked example: stock trade
Bought 100 shares of company X at ₹500/share. Sold at ₹620/share. Brokerage and taxes: ₹120 total.
Cost: 100 × 500 = ₹50,000
Sell: 100 × 620 = ₹62,000
Gross profit: ₹12,000
Net profit (after fees): ₹12,000 − ₹120 = ₹11,880
Net profit %: (11,880 / 50,000) × 100 = 23.76%
For tax purposes (Indian equity):
- Held > 12 months → LTCG at 12.5% above ₹1.25 L/yr exemption
- Held < 12 months → STCG at 20%
The post-tax profit is what actually matters for net worth.
Profit vs Margin vs Markup — these are different
| Metric | Formula | What it tells you |
|---|---|---|
| Profit % (on cost) | (Sell − Cost) / Cost | What you gained relative to what you paid |
| Margin % (on sell) | (Sell − Cost) / Sell | What you keep relative to revenue |
| Markup % (on cost) | (Sell − Cost) / Cost × 100 | Same as Profit % — just different name in retail |
For a product bought at ₹100 sold at ₹150:
- Profit = ₹50
- Markup = 50% (on cost)
- Margin = 33.33% (on sell)
Confuse margin vs markup at your peril — many small businesses overstate margin by quoting markup.
Common applications
| Scenario | What to use |
|---|---|
| Stock trade | Profit % on cost, then subtract fees + taxes |
| Real estate sale | Profit %, with indexation for LTCG |
| Retail product | Margin and markup both |
| Business operations | Gross margin (before opex), net margin (after opex) |
| Project / freelance work | Net profit (revenue − all costs) |
Components and inputs explained
Cost price
Total acquisition cost: purchase + brokerage + taxes + transport. Don't use just the sticker price.
Sell price
What you received: gross sale − any sale-side fees.
Considerations
- Always compute net profit (after all fees + taxes), not gross. A 10% gross profit can become 2% net after brokerage + STT + GST + income tax on STCG.
- Time matters. A 20% profit over 5 years (CAGR 3.7%) is mediocre; 20% over 6 months (annualized 40%) is excellent. See CAGR.
- Currency effects. Foreign-currency trades have FX gain/loss in addition to the asset gain/loss.
- Realized vs unrealized. Paper gains aren't profits until sold (and aren't taxable until sold either — useful for tax planning).
Limitations
- The calculator handles one buy-one sell trades. For multi-leg / averaging-down trades, use Stock Average first to get effective cost basis.
- Doesn't subtract fees/taxes — you do this manually before inputting cost and sell prices.
- Doesn't annualize the return — use CAGR or ROI for time-aware metrics.
Related calculators
- Margin / Markup — for retail / business
- ROI — with time-aware return
- CAGR — annualized
- Stock Average — multi-buy averaging
- Stock Profit — focused stock trade
- Crypto Profit — crypto trades with fees
- Discount — flip side (retail discounting)
Final note. Profit and loss math is simple; profit and loss attribution is hard. Was the gain skill or luck? Did fees and taxes eat the margin? Was the time horizon factored in? A 20% profit number doesn't mean anything without context. This calculator does the math; you provide the context.